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Ireland Real Estate Outlook 2018

The CBRE Ireland Outlook 2018 annual report contains the final year figures for transactional activity in each sector of the Irish commercial property market in 2017 and the predictions for each sector in the year ahead. The prospects for the Irish commercial property market remain very promising although economics, tax and politics will continue to have a huge bearing on the trajectory of the market over the next 12 months.

Our sectoral picks include Offices which experienced a record year in Dublin in 2017, and Investment where we expect to see continued appetite for prime investment opportunities in the Irish market in 2018.

Overview

Review of 2017 - Enda Luddy

“2017 was a very active year for the Irish commercial real estate sector although returns and transaction volumes returned to more normalised levels following three years of out-performance. The occupier markets continued at pace with the office sector being the star performer.”

Market Outlook 2018 - Marie Hunt

“The Irish CRE market is now approaching late cycle in many respects. However, occupier activity remains robust, development is controlled, the market is priced attractively compared to the rest of Europe and there are still considerable opportunities for both occupiers and investors alike.”

Funding Outlook 2018 - Patrick Phelan

“There has been a notable improvement in the availability of bank funding for good income-producing commercial and residential real estate. In addition, several new sources of alternative funding have emerged, with non-Irish banks, insurance companies and non-bank alternative funders all looking to grow their share of the Irish lending market.”

Key Takeaways by Sector

Offices

Considerable expansion activity is expected to support another strong year of take-up in the Dublin office market in 2018 following a record performance last year, which was boosted by a number of Brexit-related moves. There is potential for further rental growth in many parts of the market including secondary and provincial properties in particular.

Retail

With retailers increasingly focussing attention on a relatively small pool of core locations and schemes, we expect to see rental growth in the most sought-after streets and schemes but rents remaining relatively flat elsewhere during 2018 as the sector reacts to structural changes.

Industrial & Logistics

The industrial & logistics sector will firmly move into the development phase of the cycle during 2018 with new industrial and logistics facilities due to be delivered and corresponding uplift in transactional activity anticipated.

Investment

We expect to see continued appetite for prime investment opportunities in the Irish market in 2018 with investors increasingly focused on good income-generating opportunities in the office, industrial & logistics and residential sectors in particular. We expect to see some further new entrants to the Irish investment market this year.

Development

With a clear need to release more land for sale, now is the optimum time for landowners to bring sites to the market and capitalise on the depth of demand that prevails for well-located zoned and serviced sites.

Hotels

Unlike 2017, we expect to see some Dublin hotels coming to the market during the next 12 months. If this materialises, we could see up to €500 million of Irish hotels changing hands in 2018, with a sizeable proportion of these transactions occurring off-market.

Dublin Pubs

After a year in which transactional activity was disappointingly low, we believe we will see an escalation in the number of Dublin pubs offered for sale over the course of the next 12 months, which is good news for the many specialist operators seeking to secure new premises in the capital.

Cork

With room for some further yield compression and above average rental growth, we expect to see strong appetite for prime opportunities that come to the market in Cork during 2018. We expect to see increased evidence of development activity across a range of sectors in the Cork market over the next 12 months.

Please feel free to contact us if you would like to discuss any aspect of the report.